As Yemen teeters on the brink of state failure, the political chaos it has experienced in recent months coincides with its looming economic and demographic challenges. Despite questions over the future of President Ali Abdullah Saleh’s rule as he recuperates outside the country, whoever succeeds him will inherit an assortment of internal problems long neglected or mismanaged for the past 33 years. In regard to U.S. national security interests in Yemen, the fight against al Qaeda in the Arabian Peninsula (AQAP) has placed the Obama administration in a quandary between focusing on a limited counterterrorism mission and pursuing a larger scale effort to prevent Yemen from becoming a failed state, which would otherwise increase the likelihood of further radicalization and unrest in the Gulf region.

Below the surface of Yemen’s political strife, the country’s instability stems from the depletion of its oil reserves, a looming water shortage, high unemployment and a youth bulge in which over a half of the country’s population is under the age of sixteen. Although protesters have rejoiced in Saleh’s recent departure, much remains uncertain in Yemen’s future. Despite the political upheaval that has undermined the Yemeni government’s ability to function in the short and medium term, the country’s long-term demographic and social challenges pose a specter of calamities likely to engulf the poorest Arab nation within the next decade.

Yemen’s Demographic and Economic Troubles

The most pressing driver of future instability centers on the country’s youth bulge and growing population, faced with a lack of opportunities for employment. While al Qaeda in the Arabian Peninsula (AQAP) number only a few hundred militants, Yemen’s population continues to grow past 24 million, almost half of whom are under 16 years old and represent a major complication for the future. The country’s population has doubled since 1990 and is projected to double once more by 2025. The unemployment rate is currently at 35 percent, the country’s middle class has shrunk over the past decade and half of the population lives below the poverty line. Public sector employment consists of unproductive jobs that contribute very little to economic development (1). Furthermore, the low level of education in Yemen impedes the development of the country, as schools remain empty due to a lack of teachers (2). Foreign investment faces the challenge of abundant human capital without the necessary skills to become a viable work force. With the rapid expansion of the population and an inadequate amount of employment opportunities, such conditions make Yemen’s youth more susceptible to extremist messaging. Solutions suggested by the U.S. government in addressing the youth bulge center on supporting technical and farming skill development and microcredit programs to help create jobs, but the persistence of youth unemployment marks a dangerous source for future crises in the country.

A second driver of instability rests on the country’s oil revenues, which make up three-quarters of the funding for the national budget and have declined since Yemen reached peak oil production in 2004. Producing less than 300,000 barrels per day, half of which are exported, the Yemeni government has increased the exploitation of its major oil fields in Masilah and Safar in order to maintain a steady source of government funding. However, this has hastened the total production crash that the World Bank predicted to take place by 2017 (3). Although Yemen sits atop oil fields, the majority of its citizens do not benefit from the government’s 75% total revenue from the commodity, which President Saleh instead doles out to allies and towards the salaries of civil and military personnel. According to the Central Bank of Yemen, state oil revenues decreased from $4.4 billion in 2008 to $1.96 billion in 2009 (4). The Yemeni government also heavily subsidizes diesel fuel at a cost of over 11 percent of Yemeni GDP, which drains government revenue and makes local prices 60 percent below international averages (5). In June 2010, President Saleh announced that a continued decline in oil production and rise in domestic consumption has made Yemen a net importer of oil. In the future, Yemen will become more dependent on foreign assistance and worker remittances, as employment growth in non-hydrocarbon sectors of the local economy has been stagnant for the past few years (6).

Within the next decade, Yemen is expected to suffer from severe water shortages. Today, only 46 percent of rural Yemenis have access to potable water (7). Water scarcity has been exacerbated by the continued cultivation of qat, a chewed stimulant popular among Yemeni men and women with no nutritional value (8). Its farming and consumption are deeply entrenched in Yemeni society, with more than 75 percent of men chewing qat on a daily basis and spending large portions of their income on it, making the shrub one of the most profitable cash crops for Yemeni farmers. The United Nations World Food Programme has regarded Yemen as the most food-insecure nation in the Middle East. The production of qat provides employment for almost 500,000 people and takes up 40 percent of the country’s arable land (9). The large amount of water and good agricultural land needed for qat, in a country where neither is abundant, does not contribute to improving the quality of life for many Yemenis. Proposals for well-drilling are hampered by high costs, as are desalinization plants, which face the complications of transporting water across mountain ranges to farmlands and populated areas high above sea level (10). Rising domestic consumption and outdated irrigation methods have worsened the crisis. For the purpose of U.S. national security interests, USAID must continue to promote water-conserving, domestically demanded crops like coffee and wheat as alternatives to qat.

As a country, Yemen has been governed as a decentralized state. The local government is riddled with corruption, impeding its ability to provide adequate services to citizens outside Sanaa. President Saleh has excelled in maintaining political power in Yemen for 33 years, which he has described as “dancing on the heads of snakes.” (11) With oil revenues at his disposal since the 1980s, President Saleh has been adept at buying off tribal sheikhs, military leaders and political figures who posed a threat to his rule (12). He has also consolidated power by filling the top ranks of the military and intelligence services with extended family members. The Yemeni government’s democratic structure, despite its flaws, is connected to the economic future of the country and its relation to neighboring countries and donors. There is currently a generational change under way, with elite political rivalries taking place behind the scenes between tribal leaders, merchant families, technocrats and power elites (13). President Saleh is losing his grasp on power and has found it increasingly difficult to play off alliances against one another. The United States cannot predict who the next leader of Yemen will be, but the well being of the local government is closely tied with the future of a successful U.S. counterterrorism mission in the country.

Conclusion

U.S. national security interests in Yemen have been faced with complications as the country is stalled by antigovernment demonstrations, street violence and President Saleh’s refusal to step down from power. With the likelihood of prolonged violent struggle increasing each day, the Obama administration’s alliance with President Saleh is at a crossroads, with interests clashing between U.S. support for the democratic movements taking place across the Middle East and maintaining a crucial partnership in the counterterrorism effort against AQAP. Al Qaeda’s presence in Yemen, which has prompted the indoctrination of impressionable Muslim youth, has already led to multiple attempted attacks to the U.S. homeland. Representing the other half of the administration’s strategy in Yemen, USAID, the Middle East Partnership Initiative (MEPI) and other nongovernmental organizations have undertaken the task of improving conditions in Yemen’s most vulnerable, rural communities. However, with problems ranging from oil depletion, water scarcity, a youth bulge, high unemployment and poor governance, the scope of Yemen’s economic and demographic problems has proven too overwhelming to completely overcome. With rebellions arising from the north and south along with the political upheaval of recent months, Yemeni state failure cannot be an option for the United States, the West, and regional neighbors such as Saudi Arabia. While U.S. interests continue to lean towards the counterterrorism mission in disrupting, dismantling and defeating al Qaeda, stability in the country and the prevention of future radicalization also represent issues of vital importance.